So after a recent raise and a notice that my spending pattern had increased I wanted to look at the CCs I have been using and see if it is a time for a change. I am currently using amex blue cash, and chase flexible rewards for cash back as well. A year or so ago when i asked this question I was told that with my low spending 25k or a little less a year I would be better off with a cashback card, so i went that routw. Now, I am going to be spending more in the area of double that, 50k at least a year, and my family lives in BNA, and my girlfriend's family is moving to texas, so, flying will once again be a lot more often in my near future. While I love not having to pay for a ticket, because let's face it, when the time comes to go on vacation, the money goes so fast, saving 600 on plane tickets for 2 people, even though it took 1 year or maybe a bit longer to get enough miles, would be fantastic. BUT my question is, with the constant devaluing of miles, the harder time faced to use FF miles to book award travel, is it even still worth it for me to put all my spending on these cards (FF cards as opposed to cashback cards), and to try and use my miles, facing devaluation if I am only doing coast to coast flights at most?

i.e. I had been using my amex card, then they raised the fees, then they started charging for points, and now SWA charges more points for RR credits.

AA will let you book travel with FF points if you double the number of points needed for that flight, as if by paying double a seat automtically opens.


Am I being irrational? I don't try to use FF miles all the time, so I need the opinions of people who do.

Thanks for any help in advance.


p.s. in case it is relevant, the cards I am ooking at are UA, SWA, AA, so in comparison to the amex gold I used to carry, all have quite acceptable annual fees.

Well, if you know in advance what you'll be using the miles for, that makes the calculations easier. If you use 25K for a $300 ticket, that's 1.2 cents per mile charged. Many folks here cringe at the idea of using miles on an affordable domestic R/T, but if that's the route you fly, then that's where the miles go, right?

FWIW, when I've checked domestic RT's on AA using miles, between DFW and mundane (sorry) places like BNA, I'm almost always able to find something for 25K, except maybe short notice holiday weekends.

The AA card from Citi would work for you, but consider the Starwood Amex instead. Lower annual fee, and xfers of 20K miles get you an extra 5K bonus.

Bottom line, 50K in charges is easily enough to justify paying the annual fee. Whentehr it's better than whatever cash back you get currently, well, you'll just have to crunch some numbers.

Flyertalk is not the place to find a lot of people who think this is the right answer, but if you use miles for travel in Y class, particularly on popular routes, then cashback is probably better. For example, using Amex Blue Cash's new scheme, after $6500 in charges you get 1.5% cashback on all purchases except that you get 5% back on supermarkets, drugstores, gas stations and maybe one other category I forget right now. (During the first $6500 of charges per year, you get 0.5% and 1.5%, so if you do it right and buy low-reward items only for the first $6500 of purchases, you forgo 1% reward cashback on $6500 of purchases, that is, you can think of the card as charging you a $65 fee and then giving you 1.5% and 5% back on all purchases (up to $50K per year).

Whether this is a better deal for you depends on what you use miles for. A 25K domestic award, say BOS-LAX return, for example:

- if you pay on a cashback card, it costs you maybe $300, and you get $4.50 back and also earn at least 2689*2 = 5378 miles (more if you have status or take a connection) and 5378 status miles (and maybe also 1000 miles for booking online)
- if you get an award, it costs you 25K miles plus maybe $10 taxes
- so the question is whether $295.50 less 5378 miles less 5378 EQM is worth more than $10 plus 25K miles
- even ignoring the EQM, the award is only a better value if you value 30378 miles at less than $285.50, that is, if you value miles at less than 0.94c each. But when you're choosing your credit card, roughly speaking you're choosing between getting 1 mile per dollar, or at least 1.5c per dollar, so you have to value these miles at (at least) 1.5c each for it to make any sense to collect them. So the domestic award in Y makes no sense for you.

Now, maybe you want to use the cashback card for shorter trips. For the trip to be worth 25K miles if you're earning (worst case) 1.5c per mile, and (worst case) the trip is short so you only forgo earning 1000 miles total, then a little algebra will tell you the domestic ticket has to cost at least (25K + 1K)*1.5c + $10 taxes = $400 before you have _any_ chance of being ahead on miles.

Other examples are the same: coach to Europe for 50K miles would have to cost (50K + 7K)*1.5c + $100 taxes = $955 before you have any chance of coming out ahead by using miles rather than cashback cards. Coach to Australia: (60K + 15K)*1.5c + $100 taxes = $1225. And all this assumes you have no status - if you're mid-tier and earning a 100% flown mile bonus, that transcon has to cost (25K + 10K)*1.5c + $10 = $635 before you have any chance of coming out ahead; the coach trip to Europe has to cost (50K + 14K)*1.5c + $100 = $1060; coach to Australia has to cost (60K + 30K)*1.5c + $100 = $1450.

And remember this ignores the EQM - if you fly an award, you're not earning status miles, so in reality miles look even worse than this for coach flyers.

It also ignores the fact that you can do other stuff with the cash back, in case you don't want to fly any more! Plus, the cash ain't going anywhere, whereas despite what Randy says, there's always some chance your miles will be devalued or lost any time and without much warning.

For whom would it make any sense to use a mileage earning card? Well, first, if you can get more than 1 mile per dollar, it all starts to look a little better. For example, Starwood Amex will give you 1.25 miles per dollar, which brings those figures down some. Second, if you fly premium classes, it makes more sense to use miles - though not as much as you think. If you can find a saver J award to Europe for 80K miles, you'd come out ahead if you paid less than (80K + 11K)*1.5c + $150 taxes = $1515. You may be able to find this kind of price on sale anyway. First class it's even clearer you want to use miles.

The hotel calculations are similar - if you like luxury chain hotels, the Starwood Amex is fine. If you're happy with a cheaper hotel or don't like chains (or travel to chain hotel-less places), then take cashback.

If you were a huge spender, another reason for not using cashback is that the rewards are usually capped (for Amex Blue it's only the first $50K of spending per year). If you spend a bit more than $50K, just get another cashback card (eg Citibank Dividend Select or Fidelity MBNA). If you spend millions, an uncapped mileage earning card may be a better deal (less hassle). But that doesn't sound like your problem.

Last but not least - the other time you need miles is to make last minute trips which are far cheaper using miles. But if you fly enough, you earn those miles from flying anyway. If you don't fly much, then a mileage earning card may start to look better for you.

So: use cashback unless you want to fly premium classes, or unless you never fly otherwise. And sorry about the essay, I just think a lot of people on FT have this one 100% wrong. Cashback is better for 90% of people out there.

Not so fast cowboy. By any chance, are you related to Einstein or something. That was one brilliant ananlysis. Very juicy and to the point except very very complicated. Still right on the target. You get A+ ^

Hey, thanks! Now to go get A+ on some of my actual work and stop spending time on FT today...

well, if I went with an FF card it would be first off to bank some points, since both families that we visit a lot and are very close to are far away, emergeny, or walk up flights are realisitic and will probably happen at least once a year, BUT, other than southwest, does any company make it possible to use miles for walk up fares, or emergency flights?

In tis case it seems that a walk up 1000$ domestic flight would easily blow away the cashback card, but the question is, even if I pay the 75$ expedite fee on AA for example, would I still be able to use 25k miles for a walk up or same day flight provided I pay this fee.

And thanks for the write up, or essay as you call it, LOL, it is very helpful for myself and a lot of people in the same position as myself. Thank you very much!

WN is the only US domestic airline (iirc) that will give you any remaining seat on the plane for the same price, no matter if the plane is empty or fully booked. The legacies tend to charge you double (so 50K miles for a domestic coach award) to get any remaining seat. So if you're looking at earning miles or cash, the tradeoff is between (50K + foregone earnt)miles + $75 + $10 taxes, or the walk up fare. So if the walk up fare is more than (51K * 1.5c) + $85 = $850 return, then miles start to look good. In this day and age of Simplifares, you'd be pretty unlucky to have to pay that (I just priced out a return BOS-LAX leaving today, coming back Friday for $525). I'd still go with the cash unless you anticipate international emergency trips!

Don't forget to shop around for the best deals for enrollment. Right now, UA is offering 20K miles plus a $25 coupon and, I think, a 1,000 mile upgrade cert. This should factor into your decision as well. Additionally, you can hold up to 4 UA CCs at the same time and should expect to get the bonuses from each one, so it's a pretty good investment. Many folks sign up for the cards, make a single purchase, then cancel the cards. Not sure just how this affects credit ratings (probably has no real effect, IMHO) but I can tell you that many will do this.

You should also consider whether you can get anything in the way of qualifying miles for purchases. UA's currently advertising a platinum card where you get 5K EQMs for signing up and 5K EQMs for spending $35,000, plus companion certs and other stuff.

yellowtalk, my only difficulty with what you've said is that FT might not be the place to say it. To the contrary, thorough analyses like yours are EXACTLY what is needed on FT. Of course that doesn't mean you won't get some FTer with another thorough analysis that contradicts/differs in some ways with yours but that's the beauty of FT. Many thanks for your excellent work-up and for taking the time to share your efforts with us. ^ ^ (I'd offer to send your boss an email on what a great analytic mind you have but perhaps that would not be a wise move.

The analysis was great. Except as another poster mentioned above, one should calculate the enrollment boni these cards give into the variables. 20k and no annual fees are material inputs.

Yep, agreed. So if you have the self-control and the credit score for it, and if you fit my profile above, then sign up for the airline cards, take the bonus miles, and then for purchases, use a cash rebate card instead.

Aren't they now going to capacity controls on award tickets?

Yeah, the earlier posts in this thread predated that change. So strike (another) one against WN.